/etc/hosts , /etc/sysconfig/network and hostname?If you put the FQDN in /etc/sysconfig/network then the 'hostname' and 'hostname -f' commands will return the same FQDN value. This is not really correct. 'hostname' should ideally simply return the actual hostname.

ssh use with netcat to forward connections via bastion host to inside machineYes you can use a single account on the bastion host for all the clients (perhaps using a ssh public key exchange) and then use different user accounts on the inside machine, if you want. The users will actually never see that they are logging into the bastion host at all. i.e. With the ProxyCommand specified for inside.machine in .ssh/config on the client side, every time the user does a "ssh userX@inside.machine", the ProxyCommand will automatically connect to bastion first and then use nc to proxy the connection through to inside.machine.